Defense Metals Corp DFMTF

Good Move Up on Double Average Volume

[CovieNRA]

Closed up 15% today on solid volume.  PEA at least one month out and drill results 2-3 months out.
Would be interested to see who the buyers were today and why.

[Maxmoe]

Smells a bit like another small financing coming down the pipe. Good news travels first class so if there is anything to talk about ahead of pea and drill results, it will leak out. Also of note the 4 month hold on the last private placement is about to come off. Micro caps like defn are hard to buy in size so could be a few shares have shaken loose from that last financing. Nice to see moving up

[CovieNRA]

Drilling started today, so probably late November or mid December before we hear anything on that. My guess, based upon past conversations with IR and recent news releases, is that the PEA comes out anytime from October 4 to October 25. They really need to release the PEA by November, since the dreaded share issuance is coming out November 22 - 40 MILLION new shares given to Spectrum

[Maxmoe]

40 million shares to be issued in 2 months??? That a typo? 

[CovieNRA]

Nope.   Read the MD&A from July.   This is not a new thing, it has been known for 3 years since they originally got the property from Spectrum.   Part of the agreement was for DEFN to issue new shares equalling 49% of the existing outstanding shares as of November 22, 2021.   So, with 80M shares outstanding, it will be around 39.4M shares just issued

[Maxmoe]

That has to be, by far, the worst deal I've ever read. If they agreed to issue 50% of outstanding shares 3 years in advance, they are uninvestable to everyone except spectrum. Why would I invest $1 if I know spectrum gets half of that for free? It's so absurdly stupid I have to question whether it's true. I could see a large share issuance 3 years in the future as a final milestone but

[Maxmoe]

I read the md&a and indeed it appears they cut the worst deal I've ever seen. So I'm out. I'm not investing a penny with anyone this colossally inept. No wonder the stock has done nothing for the entire 3 years of this ridiculous agreement other than the spike early this year. Beats me why the F there was a spike with a change in ownership and massive dilution with zero capital

[CovieNRA]

So they will go to 120M shares from 80M shares. If the PEA from SRK values the property at $1B +, don't you think that will dwarf share issuance. there are TONS of juniors with a minimum of 120 million shares. without a doubt, the PEA coming out in 4-6 weeks is the bigger deal.  

[Maxmoe]

It is patently ridiculous. There are indeed hundreds of juniors in many industries with 120 million shares outstanding. BUT ..... BUT ...... ALL those shares were paid for. Even options and warrants have cash going into the treasury when exercised.  Maybe pennies a share, but paid for. At the same price, or close to it, as the value in the market. NONE, not one, correct me if I'm wrong

[CovieNRA]

Correct on all points.  I have never heard an explanation as to what the reasons were as to why they took that course of action. My understanding is that the shares do not go to the Spectrum corporation but to its shareholders by allocation. DEFN will have 100% control and ownership of the Wicheeda property, which will obviously be helpful in a takeover situation. As I have said on the CEO

[Maxmoe]

The number of shares to be issued November 22 is based on shares outstanding on that date. The stock price is irrelevant. Personally, I can't trust a management/directors team that entered into that deal. A clear sign they are inept,corrupt,or both. Maybe you'll make money despite them because of the assets, but it will be despite them, not thanks to them in any way. Other than piling into

[CovieNRA]

I am sure HC Wainwright was well aware of this share issuance matter when they moved forward with the $5 million placement last May.    I thought the placement deal was bad, but I now completely understand.   I think the terms were bad precisely because of the share issuance matter.  If it weren't for the share issuance, I think the price of this stock would be double

[Maxmoe]

Well, I guess we'll see how well informed shareholders and regulators are about that agreement in November. I'm waiting until that excrement hits the oscillator.  Why didn't defn exercise their option before the wainwright deal I wonder? Maybe they hadn't spent the minimum $2 million since nov 2018? It would have saved millions of share dilution. There were only 50 million o/s